Stock mutual funds gain assets for first time in 8 months

Investors in stock mutual funds added modestly to their portfolios in January, reversing seven straight months of net redemptions, according to data released today by Strategic Insight Mutual Fund Research and Consulting LLC of New York.

Despite sharply falling stock prices last month, stock fund positive flows reached $7 billion, according to estimates from Strategic Insight’s Simfund database. Inflows were experienced in U.S. stock funds ($5 billion) and international equity funds ($2 billion).

Also during January, mutual fund investors purchased $21 billion of taxable bond funds, with all key sectors showing gains, and more than $3 billion of tax-free bond funds.
Money market mutual funds benefited from more than $64 billion of net inflows, as money fund assets rose to another record of almost $4 trillion.

“January data suggests a slowing of defensive switching among stock fund investors, and implies that sizable net redemptions are unlikely to recur,” Avi Nachmany, director of research for Strategic Insight, said in a statement. “With more than two-thirds of stock fund assets held for retirement savings, the eventual recovery of stock prices will benefit most buy-and-hold investors.”
Exchange traded funds that invest in bonds garnered more than $5 billion of net inflows in January, while ETFs that invest in equities experienced modest net redemptions.